ESAF Small Finance Bank has resubmitted its preliminary papers to the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) aiming to raise Rs 629 crore. The bank has cut the issue size, now consisting of fresh equity shares worth Rs 486.74 crore and an offer for sale (OFS) of Rs 142.3 crore. Promoters, including ESAF Financial Holdings Private Ltd, along with PNB MetLife India Insurance Company Ltd and Bajaj Allianz Life Insurance Company Ltd, will sell their shares through the OFS.
Use of ESAF Small Finance Bank IPO proceeds
ESAF Financial Holdings currently holds a 62.46% stake in the small finance bank, while PNB MetLife and Bajaj Allianz Life own 4.75% and 3.89% stakes in the bank, respectively. The proceeds from the fresh issue will be utilized to strengthen the bank’s Tier 1 capital base. This decision to refile the IPO with a reduced issue size came after ESAF Small Finance Bank’s Managing Director and Chief Executive, K Paul Thomas, announced in November 2022 that the bank would be lowering the issue size for its IPO, which is expected to hit the market in FY24.
ESAF Small Finance Bank’s previous IPO attempt
Previously, the bank had filed for an IPO of Rs 998 crore in October 2021, comprising Rs 800 crore as fresh issue and an OFS of Rs 198 crore from existing investors. However, that filing lapsed as it needed to be completed within a year. ESAF Small Finance Bank is known as one of the leading small finance banks in India, excelling in terms of client base size, yield on advances, net interest margin, assets under management (AUM) compound annual growth rate (CAGR), total deposit CAGR, loan portfolio concentration in rural and semi-urban areas, and the ratio of micro loan advances to gross advances.
As of March 2023, the bank’s AUM grew to Rs 16,331.26 crore from Rs 8,425.93 crore in March 2021, marking a compound annual growth rate (CAGR) of over 39%. Similarly, the deposits rose to Rs 14,665.62 crore in March 2023 from Rs 8,999.42 crore in March 2021, translating to a CAGR of nearly 28%. ICICI Securities, DAM Capital Advisors Ltd, and Nuvama Wealth Management Ltd have been appointed as merchant bankers to guide the bank on the IPO process. The equity shares of the bank will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
(With agency inputs)